Business
Business, 06.08.2019 17:20, yasmimyamamoto2015

Lightening bulk company is a moving company specializing in transporting large items worldwide. the firm has an 85% on-time delivery rate. thirteen percent of the items are misplaced and the remaining 2% are lost in shipping. on average, the firm incurs an additional $65 per item to track down and deliver misplaced items. lost items cost the firm about $300 per item. last year, the firm shipped 6,000 items with an average freight bill of $200 per item shipped. the firm’s manager is considering investing in a new scheduling and tracking system costing $125,000 per year. the new system is expected to reduce misplaced items to 1% and lost items to 0.5%. furthermore, the firm expects total sales to increase by 10% with the improved service. the average contribution margin ratio on any increased sales volume, after cost savings associated with a reduction in misplaced and lost items, is expected to be 37.5%.required: 1a. based on a relevant cost analysis, should the firm install the new tracking system? yesno1b. what is the estimated change in pretax cash flow under the proposed system?

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